The author is a Forbes contributor. The opinions expressed are those of the writer.

Loading ...

Loading ...

This story appears in the {{article.article.magazine.pretty_date}} issue of {{article.article.magazine.pubName}}. Subscribe

Doctors face a 27 percent cut in payments from Medicare on Jan. 1. with Congress and the White House unable to come up with an agreement to avoid the so-called fiscal cliff -- or any other budgetary issues for that matter. (Photo credit: Wikipedia)

With Congress and the White House unable to come up with an agreement to avoid the so-called fiscal cliff -- or any other budgetary issues for that matter -- a major portion of pay for doctors from the Medicare program also hangs in the balance.

At issue is a permanent solution known as the "doc fix" for dramatic cuts to doctor payments from the Medicare health insurance program for the elderly under the so-called sustainable growth rate, or “SGR” formula. Without Congressional action, doctors face a cut in Medicare payments of nearly 27 percent on Jan. 1, 2013.

Only short-term fixes – 15 of them in the last decade - have been passed as a stopgap measure to prevent major cuts in physician Medicare reimbursement. The payment formula came to be as part of the Balanced Budget Act of 1997 and has never been corrected permanently by Congress.

Unlike past years when Congress has headed off the Medicare fee cut, inaction in Washington lately on the fiscal cliff and for an entire year on the “doc fix” has the American Medical Association, the nation’s largest doctor group, and physicians across the country worried there will not even be a stopgap measure this time around.

“The threat is real,” AMA president Dr. Jeremy Lazarus said in an interview. “For physician practices, it is a terrifying situation.”

The Obama administration’s latest offer to avoid the fiscal cliff to U.S. House Speaker John Boehner and Republicans in Congress includes a repeal of the SGR, which could cost more than $240 billion. Here is a link to a Washington Post story on the repeal of the ‘doc fix.”

The GOP hasn’t warmed to White House proposals, which has many lobbies for doctors worried medical-care providers are going to take a financial hit this time.

Lazarus said doctors who treat Medicare patients face a significant amount of revenue loss. “You are talking anywhere from $10,000 or $15,000 up to $35,000 per physician,” Lazarus said.

The cut will also be immediate on Jan. 1 because the Obama administration has told doctors it will not delay processing of Medicare claims.

A Medicare fee cut could also impact insurance companies like Humana (HUM), Aetna (AET), UnitedHealth Group (UNH) and other private health insurers with large businesses providing benefits to seniors through Medicare Advantage plans. Such privately operated plans contract with Medicare to provide seniors health benefits.

A cut in doctor fees would also harm what the health plans can pay doctors and could also result in physicians fleeing health plan networks, physicians say. Already, one-third of physicians who treat Medicare patients are not accepting new patients, the AMA says, in part because they are unhappy with what the program pays them.

“We haven’t seen anything as of yet that will avert that cut on Jan. 1,” Lazarus said. “With a full year to stop this drastic cut, it is absolutely inexcusable that Congress has failed to act, leaving Medicare patients and physicians to deal with the consequences.”